Australian Dollar
Reserve Bank of Australia (RBA) Governor Glenn Stevens weakened the Australian Dollar yesterday with his dovish assessment of the world economy. Prefacing his comments with an assertion that he was speaking on a global scale, not specifically in reference to the Australian economy, Stevens appeared to be trying to talk down the influence of central bank monetary policy.
Noting that the Lehman Brothers collapse in 2008 may have limited the capacity of policy to accelerate the recovery, Stevens commented that ‘That is not to say central bank policy should not have done all it could, only that we should be realistic about what it can achieve. It is often said, rightly, that policymakers should try to avoid unnecessary policy uncertainty. Maybe we need to be clearer about what we can’t do.’
The ‘Aussie’ was further harmed by confirmation from Prime Minister Malcolm Turnbull that he will call national elections after the next budget is released, intending them to be held on July 2nd. Two low impact releases, the Westpac Leading Index and Skill Vacancies figures, are the only data due out today.
Sterling
Concern that the Pound may be undervalued helped the UK asset appreciate yesterday, weakening AUD/GBP. ‘Leave’ campaigner Michael Gove gave a speech setting out his case for leaving the European Union, however his rhetoric failed to weaken the Pound and the pro-‘Brexit’ campaign drew criticism for its announcement that it would not be producing a detailed report outlining their forecast for a post-EU Britain.
AUD/GBP slumped after new telephone poll figures showed that the ‘Remain’ campaign held a 9-point lead against the ‘Leave’ camp. Even more important for investor sentiment was the fact that, when adjusted for voter turnout, the figures showed the number of people who support remaining in the EU who actually intend to vote at the polls had increased several percent.
Today’s UK labour market data and average weekly earnings figures could have an impact upon AUD/GBP, although there is a chance that ‘Brexit’ fears will continue to cloud sentiment.
Euro
Strong results from the ZEW surveys for Germany and the Eurozone helped to boost the Euro yesterday. Although Germany’s Current Condition index dropped from 50.7 to 47.7, the nation’s Economic Sentiment Index leapt from 4.3 to 11.2, while the Eurozone Economic Sentiment Index jumped from 10.6 to 21.5.
However, the news that Spain’s caretaker government would overshoot the EU budget deficit target of 3% of GDP again this year cooled Euro appetite slightly.
There is little data for the Eurozone due today other than German Producer Prices figures.
US Dollar
Poor housing data caused the US Dollar to slump yesterday despite further hawkish commentary from the Fed’s Eric Rosengren. The Boston Fed President claimed that the markets were underestimating the path of US monetary policy.
However, the day’s data undermined the strengthening effect of his words. The NAHB Housing Market Index remained at 58, despite anticipation of a 1 point rise. Housing Starts dropped -8.8% on the month while Building Permits declined -7.7%, despite a forecast 2% rise.
The only data due for the US today is the low-impact MBA Mortgage Applications report. Existing Home Sales figures, due early Thursday morning, could spark movement before the Australasian session begins.
Canadian Dollar
A lack of domestic data or news meant the Canadian Dollar was fully at the mercy of oil prices yesterday. As it was, ‘black gold’ was recovering after Monday’s slide thanks to a strike by oil workers in Kuwait, which slashed the country’s output by 1.3 million barrels per day. WTI Crude climbed back above US$40 per barrel and Brent Crude edged towards US$44.
Today sees low impact Wholesale Sales data for Canada, however, US Crude Oil Inventories figures due early on Thursday could strengthen or weaken oil prices, moving the ‘Loonie’.
New Zealand Dollar
A rise in dairy prices saw the New Zealand Dollar strong overall yesterday, although the ‘Kiwi’ lost ground to the recovering Pound Sterling and Canadian Dollar. The latest GlobalDairyTrade auction yielded a 3.8% price increase, with the average price climbing from US$2,188 per metric tonne to US$2,163. Whole milk powder saw a sizeable 7.5% increase.
There is no New Zealand data due today.
Data Released
April 20th 18.30 GBP Claimant Count Rate (MAR) 2.1%
April 20th 18.30 GBP Jobless Claims Change (MAR) -10.0k
April 20th 18.30 GBP Average Weekly Earnings (3M/YoY) (FEB) 2.3%
April 21st 00.00 USD Existing Home Sales (MoM) (MAR) 3.5%
April 21st 00.00 USD DOE U.S. Crude Oil Inventories (APR 15)